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Government Asks States Not To Stop Payments To Renewable Energy Producers

The central government has asked states to continue to buy power from renewable energy producers and clear their dues "on a regular basis as was being done prior to the lockdown".

The Ministry of New and Renewable Energy on April 1 wrote to all states and electricity distribution companies after renewable energy producers complained that some states were curtailing purchase and payment for electricity generated from sources such as solar energy.

In the letter, the ministry said the power ministry has recently issued instructions providing for a moratorium to distribution companies or discoms for making payments to electricity generating companies in the wake of Covid-19 outbreak and the following nationwide lockdown.

Some state discoms, however, used that order to start curtailing renewable energy power terming the prevailing situation a 'force majeure' condition. The ministry, according to the letter reviewed by PTI, directed the discoms to accept invoices and billing through emails and make payments to renewable energy generators as per their power purchasing agreements.

"Renewable energy generating stations have been granted 'must-run' status and this status of 'must-run' remains unchanged during the period of lockdown," it said. Solar and wind electricity generating stations have been granted a place in the "essentials" list exempted from the lockdown, and they will be allowed to continue to function during the lockdown period.

"Since discoms have already been given sufficient relief and as electricity from renewable energy comprises only a minor portion of the total electricity generation in the country, the payments to RE generators be done on a regular basis as was being done prior to the lockdown," it said.

The direction from the government followed Indian Renewable Energy Alliance writing to the ministry saying the generators need a continuous flow of cash to ensure they stay afloat, keep plants running, repair any failures, buy spare parts and continue to employ workforce. "Now despite there being no mention of a moratorium on the payments to be made by the discoms (to renewable energy generators), some discoms are purposely misconstruing the intent to deny payments to RE generators," it had written on March 31.

It said the renewable energy industry was already grappling with payment issues from state discoms and was still in a long ongoing legal battle with Andhra Pradesh discoms. "On top of that, if generation payments abruptly stop from the discoms who are buying our energy, there will be hugely negative consequences for the entire RE industry," the letter said warning of the industry's ability to operate and maintain the power plants, pay solar park charges and land lease charges.

Also, in the absence of the payments, they may not be able to service a large pool of overseas debt. "All of this will lead to a loss of jobs for labour and contractors at the site, income for small owners, and damaging all the future investments in the solar sector," it wrote. Industry chamber Federation of Indian Chambers of Commerce & Industry also wrote to Power and Renewable Energy Minister RK Singh on March 30 stating if generation payments abruptly stop from all discoms, who are buying their energy, there will be huge negative consequences for the entire RE industry, impacting their ability to operate and maintain the power plants.

"This will lead to loss of jobs," it said. FICCI said while the three-month loan moratorium advisory announced by the Reserve Bank of India is a positive step, it may not be sufficient to sustain RE generators. "RE sector will still need to service the significant international debt exposure in the form of ECB and green bonds," it wrote.

Stating that RE generation industry needs a continuous flow of cash to ensure they stay afloat, FICCI said considering the gravity and extent of the pandemic, it is vital that liquidity in the sector is not impacted.